----- Original Message ----- From: Le Monde diplomatique (r) <[EMAIL PROTECTED]> To: English edition <[EMAIL PROTECTED]> Sent: Friday, November 12, 1999 10:46 AM Subject: Eastern Europe heads into the unknown > > Le Monde diplomatique > ----------------------------------------------------- > > November 1999 > > > FORMER COMMUNIST COUNTRIES BRACED FOR CHANGE > > Eastern Europe heads into the unknown > _________________________________________________________________ > > After selecting five Eastern European countries (the Czech Republic, > Estonia, Hungary, Poland and Slovenia) as "first-wave" candidates for > accession to the EU, the European Commission decided in mid-October to > begin negotiations with all the candidates. While this apparent > raising of the barrier could delay accession for some of the original > five, it does not necessarily involve a commitment to the others. The > sudden change of policy is explained in part by the problems > enlargement is creating for the Fifteen, but it also reflects growing > concern about the outcome of transition in the East. Despite the > undoubted gains in democracy, the peoples of Eastern Europe are > experiencing a social crisis of unprecedented proportions. And as > disillusionment grows, enthusiasm for Europe is waning. > > by CATHERINE SAMARY * > _________________________________________________________________ > > Russia and the other countries of the former communist bloc are said > to be in transition to a market economy. But what is "market" supposed > to mean? The consumer market, where Polish housewives can now choose > from a range of fancy cheeses? The labour market, which has to be > "downsized" if it gets too expensive? Or the stock market, which in > Russia is growing by leaps and bounds while the majority of the > population sinks deeper and deeper into poverty? It's easy to see why > people prefer to talk about "the market" in general, as if it were a > socially neutral mechanism. > > In the Stalinist empire the word "socialism" served as a cover for > oppression and bureaucratic privilege. Now the absence of a defining > concept is being used to camouflage reality. The term "capitalism" is > never used. Instead, the process is described as transition to the > "market economy". > > Clearly, Eastern Europe has gained by the introduction of a > multi-party system and the fall of the Berlin Wall. But walls made of > money are harder to demolish. And the real issues, i.e. the ethical > choices and alternatives (1), are not discussed at all because the > free market gospel requires the economy to be taken out of the > political arena. As if there is nothing political about replacing > collectivisation by privatisation, or the dogmas of "scientific > socialism" by the laws of a capitalist market that are supposed to be > universally beneficial but are in fact causing social disintegration. > Or replacing state bureaucracy by the privatisation of a state in > thrall to mafia-run monopolies. > > Trotsky saw the Soviet Union as a hybrid society, neither capitalist > nor socialist. "Thinking people," he emphasised, "saw plainly that a > revolution in the forms of property does not solve the problem of > socialism, but only raises it" (2). And in response to the barrage of > official statistics, he postulated "a unique law of Soviet industry" > that stated that "commodities are as a general rule worse the nearer > they stand to the mass consumer" (3). So the issues of democracy and > the consumer market (and hence also the money market) were already at > the core of his criticism of Soviet planning. > > It was Rosa Luxembourg who, while supporting the October Revolution, > most clearly identified the risks involved in the Bolshevik attack on > the multi-party system. Writing from prison in 1918, she warned that > the suppression of political pluralism was likely to stifle, rather > than preserve, the progressive potential of the revolution: "Freedom > only for the supporters of the government, only for the members of a > party, however numerous they may be, is not freedom. Without general > elections, without unrestricted freedom of press and assembly, without > a free struggle of opinion, life dies out in every public institution, > becomes a mere semblance of life, in which the bureaucracy remains the > only active element" (4). > > For Bolsheviks in the 1920s, the term "socialism" denoted a political > project. It did not apply to the actual situation in the Soviet Union, > which they considered to be a society in transition to socialism. > After the "physical liquidation of the bourgeoisie as a class" and the > forced collectivisation of the late 1920s, Stalin proclaimed that > socialism had been achieved. The state and party bureaucracy, of which > there was no mention in the official statistics, ruled in the name of > the workers, imposing its will on them and promising them a bright > tomorrow. And for a few decades, despite considerable human and > environmental damage, it did indeed provide them with real increases > in living standards and real, if economically unsound, full employment > - always on condition they held their peace. > > The huge state and party apparatus was in the grip of bureaucratic > conservatism. Individuals and groups, both social and national, were > oppressed and disempowered in the alleged interests of society as a > whole. In the space of a few decades the social relations thus created > became an insurmountable obstacle to the development of productive > forces. > > The whole range of suppressed ideas and social issues was subsumed, > for better or for worse, in the single party. But the new revolution, > when it came, was not based on social movements actively pursuing > coherent projects. The real significance of this historical > peculiarity is only now beginning to be appreciated. It has often been > explained by the alleged passivity of people in the "socialist" > countries. They were supposed to have become so used to having things > done for them that they were unable to rebel. Not so. There had been > many unforeseen developments over the previous decades when revolts > opened up new prospects and possibilities. But the social and > political movements that fought bureaucracy and dictatorship in the > name of socialism were all suppressed, likewise in the name of > socialism. > > Such was the fate of the struggle against the "red bureaucracy" in > Yugoslavia, the 1956 workers' councils movement in Hungary and Poland, > and the Prague Spring of 1968. And it was a Polish communist general, > Wojciech Jaruzelski, who, in the name of the working class, suppressed > an independent trade union representing millions of workers. That > union, Solidarity, was composed of many different ideological strands > but in 1981 it was still calling for workers' self-management, not > privatisation. Of course, Poland was then and still is a key component > of a strategy designed to tip the balance towards privatisation. That > is why it received help with its national debt and a fund for > stabilising the zloty. > > But the fact remains that repression by "communist" regimes confused > political concepts and projects to such an extent that in the 1980s in > Poland most people claiming to be on the side of progress described > themselves as rightwing. Similarly, in Czechoslovakia in 1968 > "imperialism" was a term applied to the troops of the Warsaw Pact, not > Nato. Yet the Warsaw Pact has ceased to exist, while the Atlantic > Alliance is being enlarged to the east. > > In the 1980s the peoples of Eastern Europe were faced with a > deterioration in their meagre social achievements. Their only desire > was for a higher standard of living and greater freedom. If they had > any model in mind, it was that of Sweden or Germany (now suffering > from the impact of reunification and dislocation in the east). Sick of > ideology, they simply wanted to catch up with civilised countries and > live like everyone else in a market society that was supposed to > guarantee prosperity, efficiency and individual liberty. The Berlin > Wall fell and the dictatorships collapsed. But now that the cheering > has died down, how do matters stand after a decade of systematic > change? > > Is the Russian crisis an exception mainly affecting its neighbours > such as Ukraine? The analysis and figures in the authoritative Guide > to the countries of Central and Eastern Europe - 1998 (5) do not > ignore the difficulties, particularly in the Balkan countries, but > still paint a rather optimistic picture. "In the Peco countries" (6), > writes Jean-Pierre Page, "the prescriptions of market economics have > worked fairly well, especially as those countries already possessed > structures and institutions that were in the process of transition to > the market. In Russia and Ukraine, however, the same measures, applied > to economies and populations that were not prepared for them, have not > worked well and have even had adverse effects." > > While the Central European countries' gross domestic product has been > growing since 1993-94, that of Russia now stands at half its 1991 > volume. The old saying "when Russia sneezes, Eastern Europe catches > cold" no longer holds true. In the same report Jacques Rupnik argues > that "the pace and conditions of the transition to democracy and the > market economy in Central Europe are relatively independent of the > former imperial metropolis" (7). > > This view is, however, debatable. Even if the scenarios are different > (because the starting points for the transition were also different), > there are more common features than might appear at first sight. > Nowhere were people prepared for the deterioration in social > circumstances which the majority of the population has experienced in > all the countries concerned. And throughout the region the rejection > of socially destructive policies at the polls is leading to the > formation of centre-left coalitions, with high scores for former > communist parties going under various labels. But whatever the > election promises, all governments tend to behave in a similar fashion > once in office , responding first and foremost to the pressures and > demands of Western free market economics. > > So despite the initially different therapies adopted, the trend > towards similar policies in the Eastern European countries is creating > a political system that is bipolar in form yet devoid of any real > political alternatives (8). As public disenchantment grows, so does > the danger of rightwing nationalism and populism. In every country a > minority is growing rich while the majority is experiencing "one of > the most violent shocks that has occurred anywhere in the world since > the second world war" (9). According to Unicef, the changes that have > taken place in Eastern Europe are unprecedented both in kind and in > extent. In relative terms, they are more pronounced than those that > affected Latin America and Africa during the lost decade of the 1980s. > The increase in poverty and unemployment, and the huge differences in > living standards, are general. Queues have been replaced by price > increases. Shop windows display a wide range of goods, but the vast > majority of people cannot begin to afford them. > > When growth resumed, as in Poland, it widened the gaps in living > standards and regional development. Only the free market ideologists > think the market reduces those differences. Although distinctions can > be made between groups of countries in terms of growth and the > stability of the transition process, no simple pattern emerges. Market > reforms began in former Yugoslavia long before its neighbours. With > the exception of Slovenia, however, it is faring no better than they > are. After the Prague Spring, Czechoslovakia remained one of the most > totalitarian regimes in the Soviet bloc, but the Czech Republic is now > one of the five "advanced" candidates chosen for the first wave of > accession to the European Union. Slovenia has the highest standard of > living of the former communist countries even though the pace of > privatisation has been slower than in others. From Russia to Bosnia, > including the Czech Republic, the regimes in power are tainted by > similar financial scandals and corruption, whatever their political > labels and their stage in the transition process. Prague was recently > the scene of a new scandal involving the payment of backhanders worth > $6m by a Dutch firm to secure the contract for the privatisation of > the country's telecom system (10). > > The Peco countries' realignment with the EU also has a downside. Over > 50% of their trade is now conducted with the EU, but their new > dependence is beginning to have adverse effects. Their exports have > fallen sharply on account of the Union's sluggish growth rate, while > imports from the EU are growing by leaps and bounds. As a result, all > the Peco countries have worrying trade deficits (11). The influx of > volatile foreign capital into Poland is making matters worse by > bumping up the exchange rate. And, contrary to claims from Brussels, > adoption of the EU's economic operating criteria has increased > instability in the region. > > The rush to join the capitalist world and lay hands on exportable > resources has been a major factor in the disintegration of federal > states from the Soviet Union to Yugoslavia. The process is not > finished yet, either in Russia or in the Yugoslav Federation (Serbia > and Montenegro). Access to the sea (in Daghestan, Montenegro or > Croatia), control of mines (in Kosovo), oil (in the Caspian) and the > pipeline route, are not open demands in national and international > conflicts, but they nourish them. There was no war in Czechoslovakia > but the same social and economic logic underlay the break-up of the > federation. The Czech Republic wanted to get rid of Slovakia, just as > Slovenia and Croatia wanted to get rid of Yugoslavia's less developed > regions. > > A high level of development under the former regime is an advantage > for accession to the EU: the poorer you are, the more it costs to > catch up. It is also more attractive to foreign investors, especially > because of the greater availability of qualified labour. All this > tends to widen the gaps, undermine solidarity, and encourage the > richer regions or countries to break away. There is a significant > increase in the number of contracts awarded to local branches of > multinational companies whose target is the European market. > Certainly, the prospect of EU membership may work in favour of > political and social stability in the short term. But because that > prospect is accompanied by ever more sacrifices, public attitudes > towards the EU are becoming more negative. This trend is clear in > Poland (12), the Czech Republic and Slovenia. > > The statistics on privatisation in Russia, as in the Czech Republic, > Romania, Poland and elsewhere, are tailored to the expectations of > foreign creditors, the International Monetary Fund and the European > Commission. Eastern European countries have to prove they are on the > right road. Privatisation extends even to sectors that worked well > under the old system, such as Hungarian agriculture and the Slovenian > health service. And enterprises the authorities are unable or > unwilling to sell to foreign capital are privatised without any real > capital input. > > The return to capitalism is taking place in an unprecedented > historical context. The mass of former communist bureaucrats have > embraced privatisation projects in order to enhance their old official > status with property privileges. Yet the capitalist system now being > introduced suffers from lack of capital and an organic bourgeoisie. > The creation of a real market for labour and capital is hampered by > the global environment - dominated by multinationals with whom it is > impossible to compete - and by the social cost of the transition. > > Under the old system property was not privately owned, but nor was it > owned entirely by the state. Legal transactions have often been > necessary for the state to gain ownership of property and the right to > sell it. But property was not controlled by society either - and even > less by the workers. In a situation where property was a hybrid > belonging to everyone in general and no one in particular, money did > not function as capital that could be used to acquire the means of > production. > > In the Soviet Union, for example, there was a distinction between two > types of rouble. In the movement of goods (machinery, raw materials, > semi-finished products) between public enterprises, an "accounting > rouble" was used to give monetary expression to plans that were > essentially worked out in kind. Quantities of steel or tractors to be > produced by various enterprises were fixed by administrative decision, > and the accounting rouble could not be used for real sales or > purchases. The practice of camouflaging resources, and the unofficial > distribution networks, developed in response to this constraint. The > second type of rouble was distributed as income for the purpose of > purchasing consumer goods. But it could not be used to buy enterprises > or raw materials. At the same time, there was no market in stocks or > bonds, and the banking system was an instrument of official planning. > So bureaucrats had no means of transferring property to their > offspring. > > The privileges of the bureaucracy were thus mainly confined to the > consumer sector (special shops, rare goods, travel facilities, dachas, > special clinics, etc.) As a result, the primitive accumulation of > capital did not precede and pave the way for the transformation to > capitalism. It is taking place now, along with the transition to the > money economy. So, while mafia-type organisations and parallel > networks existed under the old system, it is only now that they can > really expand. > > The only other capital available was money kept in savings accounts. > Many evaluations have shown that it was enough to cover about 20% of > the property to be privatised, estimated at the lowest prices. In > practice privatisation by direct sale has been virtually confined to > Hungary, where the superior purchasing power of foreign capital was > used to acquire the country's finest assets. The remainder was legally > converted into various types of stock companies, in which the state > was initially (and often thereafter) the main shareholder. Following > this transformation various forms of mass privatisation were > undertaken, involving redistribution of the majority of shares. Share > coupons were issued to workers in the individual enterprises or to the > general public. The coupons could be sold, used to buy shares, or > deposited in investment funds. Whereas the workers' main motivation > for becoming shareholders was to protect themselves against foreign > owners and safeguard their jobs, the financial experts hoped that a > sufficient concentration of property would emerge to produce real > owners capable of imposing disciplined management - i.e. a programme > of redundancies. For them, the aim of mass privatisation was twofold: > to sweeten the pill of privatisation for the general public and to > enable the principles of free market economics to be applied without > any real input of capital. > > How these management changes work out in practice depends on a complex > set of interactions in which the new banking system plays a key role. > Where the banking sector has been opened up to foreign capital, as in > Hungary and above all Poland, it tends to impose tough management > constraints. Where, as in the Czech Republic, the banks are both the > principal national shareholders in the enterprises that are to be > restructured and also their creditors, the planned restructuring is > not carried out. And in all countries the new banking systems are > being undermined to a greater or lesser degree by bad debts contracted > by enterprises which they are in practice continuing to prop up. > Unless, of course, the banks are looking to make a profit, as is > overwhelmingly the case in Russia. Then they grant no loans to > businesses, preferring to borrow abroad and, like foreign capital, > speculate in government bonds. > > But the main obstacle to restructuring is the social, and hence > political, cost. It is compounded by another hangover from the old > system. Money was not the only means of subsistence of a Soviet-type > wage-earner. In order to achieve the quantitative objectives of the > official plan and maintain a sufficiently qualified workforce, the > directors of enterprises supplemented the meagre wages they paid by > benefits in kind, such as creches, housing, special hospitals, holiday > camps and shops. Big enterprises were thus centres of social activity > for their workforce and sometimes provided a structure for the whole > surrounding region. > > Despite the Russian crisis many of these social benefits are being > maintained, though in a much degraded form. They enable the directors > to lessen the social impact of the non-payment of wages, and at the > same time to use payroll funds for profitable financial dealings. In > Russia barter arrangements and non-payment of debts between > enterprises, as well as non-payment of wages and of taxes, have > assumed considerable proportions (13). But in the Czech Republic too, > despite the privatisation of large enterprises and relatively low > unemployment, non-payment is widespread and a large proportion of the > countries' enterprises are not being restructured in accordance with > capitalist criteria of profitability. In Poland there are considerable > regional and sectoral differences, depending on the size and nature of > the enterprise. And throughout Central and Eastern Europe, wherever it > has not been possible to privatise housing and thus dissociate it from > employment, the restructuring problem is compounded by the housing > issue. > > In all the countries of Central and Eastern Europe, the same factors > are attenuating public reaction against the situation. Those factors > are the black economy, the preservation in a degraded form of systems > of protection involving benefits in kind, and the crisis itself. There > is a proliferation of petty jobs not declared for tax purposes. In > Russia the cultivation of vegetables on tiny private plots replaces or > supplements unemployment benefits. The old trade unions remain very > bureaucratic but sometimes still have the power to distribute benefits > in kind, while the new "independent" unions, whose leadership is soon > corrupted, have often become nothing more than conveyor belts for free > market policies. > > The economic, moral, environmental and political damage left over from > the old regime is constantly being assessed. But who is assessing it > and by what criteria? Where "economically unsound" full employment is > replaced by "economically sound" unemployment; where queues disappear > but the goods in shop windows are inaccessible; where run-down public > services are privatised in a two-tier world in which poverty is > spreading all the time whether you have work or not; where the growth > of the markets and the money economy does not mean greater access to > goods and services for the great majority, but instead more stocks and > shares and luxury goods for a minority, we are heading for an > explosion that could open the way for the rightwing extremists who > inveigh against "cosmopolitan" globalisation. > _________________________________________________________________ > > * Lecturer at the University of Paris IX, research associate at the > Centre Réforme et ouverture des systèmes économiques (post) > socialialistes (Roses) of the CNRS (National Centre for Scientific > Research), author of Yugoslavia dismembered (translated by Peter > Drucker), Monthly Review Press, New York, 1995. > > (1) The award of last year's Nobel prize for economics to the Indian > economist, Amartya Sen, who has so strongly criticised the prevailing > separation of ethics from economics, is highly welcome. After the > Asian, Russian and Brazilian crises, the jury may well have been > ashamed of awarding the previous economics prize to a pair of > stock-market game modellers working for the hedge fund LTCM, which a > few months later was on the verge of bankruptcy. > > (2) Leon Trotsky, The revolution betrayed : what is the Soviet Union > and where is it going?, Faber & Faber, London, 1937, translated by Max > Eastman, Chapter II, Section 1. > > (3) Ibid, Chapter I, Section 2. > > (4) In Selected political writings of Rosa Luxemburg, Cape, London, > 1972 > > (5) Jean-Pierre Pagé, "Panorama économique", p. 5, in Tableau de bord > des pays de l'Europe centrale et orientale - 1998, Centre for > International Studies and Research (CERI) of the National Foundation > for Political Science, Paris, 1998; see also Edith Lhomel and Thomas > Shreiber (coord.), L'Europe centrale et orientale, Etudes de la > Documentation française, Paris, 1999, and Roberte Bertoni-Hogge and > Marie Agnès Crosnier (coord.), Les pays de la CEI, Etudes de la > Documentation française, Paris, 1998. > > (6) The ten Central and Eastern European countries that have > association agreements with the EU and have applied for membership, > namely: Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, > Poland, Romania, Slovakia and Slovenia. > > (7) Jacques Rupnik, "Paysage est-européen après la crise russe", in > Tableau de bord, op. cit., p.15 > > (8) See Bruno Drewski, "Les paysages politiques du post-communisme", > in Violette Rey (ed.), Les territoires centre-européens. Dilemnes et > défis - L'Europe médiane en question, La Découverte, 1998. > > (9) See Jean-Yves Potel, Les Cent portes de l'Europe centrale et > orientale, pp. 214-218, Editions de l'Atelier, Paris, 1998. > > (10) L'Europe centrale et orientale - 1999, op. cit., p. 173 > > (11) Nicolas Meunier, "L'Inquiétant creusement des déficits > commerciaux de l'Europe de l'Est", Flash, no. 99-02, 11/1/1999, CDC. > > (12) See Robert Soltyk, "Poles torn between hope and fear", Le Monde > diplomatique, English edition, February 1999. > > (13) See Yves Zlotowski, "La crise des paiements en Russie', in CERI > Studies no. 34, August 1998, National Foundation for Political > Science, Paris. > > Translated by Barry Smerin > > > > _________________________________________________________________ > > ALL RIGHTS RESERVED © 1999 Le Monde diplomatique > > <http://www.monde-diplomatique.fr/en/1999/11/?c=04samary> > > --- from list [EMAIL PROTECTED] ---
